Mobilicity announces proposed transaction with TELUS

TORONTO, April 17, 2014 /CNW/ - Data & Audio-Visual Enterprises Holdings Inc. and its affiliates (collectively, Mobilicity) announced today a proposed going concern transaction in which TELUS Corporation ("TELUS") would acquire Mobilicity for $350 million (the "Transaction"). The proposed Transaction, will be implemented pursuant to a plan of compromise or arrangement under the Companies' Creditors Arrangement Act (the "Plan").

Mobilicity has been operating under CCAA since late September of 2013, with the completion of a transaction as its key initiative. The sales process has been supervised by the Court appointed Monitor (Ernst & Young Inc.) who supports and recommends the Transaction.

"The Transaction is a good outcome from Mobilicity's restructuring efforts and extensive Sales Process," said William Aziz, Mobilicity's Chief Restructuring Officer. "I am confident the Transaction will serve the best interests of Mobilicity's customers and employees."

The Transaction provides for a complete continuation of Mobilicity's business for the benefit of its stakeholders:

• the vast majority of Mobilicity's one hundred and sixty five thousand active subscribers will be able to seamlessly migrate onto TELUS' advanced HSPA network after the transition.
• no foreseen changes to employee staffing levels as a result of the proposed transaction;
• all of Mobilicity's retail landlords and licensors will have their contracts honoured;
• all of Mobilicity's landlords and licensors who provide space for placement of Mobilicity's dealers and their employees who sell Mobilicity's products will continue to benefit from those arrangements;
• all service agreements with Mobilicity's business partners will continue uninterrupted; and
• the trade claims of Mobilicity's creditors will continue unaffected against the restructured Mobilicity and will be addressed in the ordinary course.

Over the past several months, Mobilicity, with the help of its financial advisors and the independent, Court-appointed Monitor, conducted an exhaustive process to explore all potential sales and other transactions for the company. The Sales Process was a widely advertised, competitive process that provided a fair and equal opportunity for all parties interested in bidding for all or part of Mobilicity's assets. In total, 25 organizations were contacted about submitting bids as part of the Mobilicity Sales Process. Of the 25, six organizations submitted participating materials and five bids were received by the December 16, 2013 extended bid deadline. Of the five bids, only the Transaction with TELUS was determined to be an acceptable transaction.  Approximately 95% of the holders of Mobilicity's 15% senior unsecured debentures due 2018 also support the Transaction and have agreed to vote in favour of the Plan.

Since January of this year a number of changes have occurred in the Canadian market for commercial mobile services, including the expiry of the moratorium on the transfer of Mobilicity's spectrum licences, the successful completion of the 700 MHZ spectrum auction by Industry Canada, the announcement by Industry Canada of its 2500 MHz spectrum auction, the completion of Mobilicity's Court-approved Sales Process and the Court-appointed Monitor's support for the Transaction with TELUS.

In addition to being in the best interests of the company and its stakeholders, Mobilicity believes that the Transaction will not affect competition in the Canadian wireless sector, satisfies the criteria considered by Industry Canada in determining whether to approve a transfer of spectrum licences and meets Industry Canada's policy objectives in respect of utilizing spectrum for advancing network expansion into non-urban areas.

The proposed Transaction would be subject to conditions including approval by the Ontario Superior Court of Justice (the "Court"), the Competition Bureau, Industry Canada, and Mobilicity's debtholders.

Meeting of the Affected Unsecured Creditors to vote on the Plan

Mobilicity has today filed materials with the Court to seek, on April 23, 2014, an order (the "Meeting Order") permitting Mobilicity to hold a meeting of its Affected Unsecured Creditors on April 30, 2014 to consider and, if appropriate, approve the proposed Plan. A copy of the materials filed with the Court, and provided to the Service List, is available on the Monitor's website at www.ey.com/ca/mobilicity.

The materials made available on the Monitor's website include the proposed Plan, Notice of Meeting and forms of Proxy and Meeting Order. None of the materials have yet been considered or approved by the Court. However, any person who is a creditor of Mobilicity is encouraged to review and consider the materials. To the extent that the Court issues the Meeting Order, Affected Unsecured Creditors will have to submit their proxies to the Monitor by 5 p.m. on April 28, 2014. Please refer to the Monitor's website for more details.

Mobilicity to file for extension, business as usual for wireless customers

On April 23, 2014, Mobilicity will ask the Court for an extension of the current Stay of Proceedings from April 30, 2014 until June 30, 2014.

In the meantime, it continues to be business as usual for Mobilicity's wireless customers. There are no changes to Mobilicity's network and Mobilicity continues to honour prepayment plans for its customers. Phones continue to work as they always have and Mobilicity's dealer network is open for business.

"On behalf of our entire organization, I want to thank our valued customers for continuing to stand by us as we progress through this process," said Mr. Aziz. "We have found them a good home with TELUS."

For more information, please visit www.mobilicity.ca/investorrelations or www.ey.com/ca/mobilicity. Creditors can contact the Monitor by email at [email protected] or by phone at 1-855-287-4005.

About Mobilicity (DAVE Wireless):

Mobilicity, Canada's smart mobile carrier, was created to bring down the cost of wireless with unlimited talk, text and data plans, affordable North American coverage, plus popular handsets and smartphones -without locking customers into contracts or charging extra or hidden fees.

Formerly known as Data & Audio-Visual Enterprises Wireless Inc. (DAVE Wireless), further information about Mobilicity can be found at www.mobilicity.ca.

SOURCE: Mobilicity

Longview Communications

Joel Shaffer 416-649-8006
Nick Anstett 416-649-8008